Hi Jimmy, yes, the crop factor is applied by the DSLR itself becuase of the size of its sensor.

So the 400D / XTi will effectively multiply the focal length of ALL lenses attached by 1.6 times. That's why you need a lens with a focal length around 17 or 18mm in order to deliver a wide angle that's equivalent to about 28mm.

The situation's the same with most other DSLRs too though, except they generally have 1.5x factors. Nikon, Pentax and Sony all have 1.5x factors.